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Apologies to anyone who tried to post a question or comment at the BLOG last week. We had a technical problem of which we were unaware, and it has since been resolved. Feel free to return and post away.

To use the BLOG, simply go to the home page at www.otcjournal.com - the BLOG will scroll down automatically on the right side of your screen. The most current journal entries appear in the middle of your screen. Check back frequently for updates particularly when stocks are moving to overbought or oversold levels or in volatile markets. Your questions and postings do not automatically appear, so don't bother posting the same question multiple times. I personally go through to moderate and respond to every question.
 

Market Comment

Tommorrow is a huge day for the market as it relates to the remainder of the year. The market ends up higher from Nov 1 through Dec 30 84% of the time. It is typically the strongest seasonal time of the year for small stocks. 

The year end rally is now in question thanks mostly to fears of inflation. Rising energy prices are hurting consumer, causing analysts to predict a weak holiday season. Rising interest rates are adding fuel to the fire as this hurts the consumer's ability to fuel spending from home equity.

Tomorrow is a huge day for the market because of the FOMC meeting. The FED will raise interest rates another 1/4 point. That is a given. However, the market will be acutely focused on the FOMC statement. If the FED says it is becoming a little less concerned about inflation, the market should rally. If the FED's view remains unchanged, choppiness should continue to rule the day. If the FED states it is more worried about inflation than before, watch the market tank.

Thanks to the current pull back in energy prices, I believe there is a chance they could modify their views. Oil is now below $60- A close below $58 could bring $52 into the picture. The hurricanes are behind us. A good environment to stop worrying about inflation. I believe the FED is gearing up to end the rate high cycle at the end of January- Greenspan's last stand.
 

Family Room Brings Back Rambo

Many consider Stallone to be the master of the film franchise. After all- he had two of them- Rocky and Rambo- I guess he likes names that start with R.

When a film gets the francise tag: i.e. Star Wars, Harry Potter, The Godfather, The Die Hard Series (Bruce Willis), The Lethal Weapon series (Mel Gibson), etc, it can make millions over many years for producers.

In light of the renewed state of conflict world wide, Family Room is teaming up with Sylvester Stallone to revive the Rambo brand. Family Room issued a press release today after the market closed, disclosing they will begin filming "Rambo IV" in the Spring of '06 with a $50 million budget.

The first three Rambo films grossed an average of $83 million in the US alone, and were all in theaters between 1982 and 1988. For those of you who are following the FMLY, you will note that co-Chairmain George Furla believes FMLY stands to profit handsomely from any picture they produce that enjoys more than $50 million in box office sales.

The Rambo series delivered an average of over $80 million at the box office in the 80's. By today's standards, the numbers would be considerably higher. I like FMLY's chances with Rambo IV and probably a sequel or two.

Along with the two potential blockbusters in post production: 16 Blocks with Bruce Willis and Wicker Man with Nicolas Cage, Rambo IV is certain to join the growing list of potential candidates that could produce windfall profits for FMLY. 

With $180 million in productions under their belt in 2005, 2006 is already shaping up better. $50 million is now in the books, and I am quite certain 88 minutes with Al Pacino along with Day of the Dead and Room Service with Jessica Simpson will all materialize in 2006.

Unfortunately, the 1 year weekly chart of FMLY continues to look pretty bleak. The stock simply does not trade enough volume to absorb excess supply coming from the annual toxic financing in which the company has engaged the last three consecutive years.

It is a race between dilution and box office success which could determine the fate of current shareholders. This is a difficult challenge, as FMLY continues to be a good company with enormous upside potential, but a poor performer as a stock.

There are two possibilities that could bail out the stock price: 1. Enough volume could materialize to take out the excess supply coming from the toxic financing, or 2. The company could enjoy a windfall profit from a film, and use the capital to redeem the $2 million note (probably about $1.8 million now).

At some point in time shareholders are going to make a lot of money in FMLY. The only question- will it be this generation or the next? If oppressive supplies continue hitting a lack luster market, the stock could continue to trade lower until the process completes itself. At some point in time, the process will run its course, and the stock will be poised to have its day. 

Until then, it is anybody's guess where we could go. From a valuation perspective there is plenty of upside. From a demand/supply perspective it could be many more months of the same.

In either case, we could see the trampoline effect covered in the weekend edition could happen tomorrow on this news. Look for a nice bounce from an absurdly oversold stock. 

Here is the complete text of today's news for your review:
 

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